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Historic movement changes Brazil for the better

A movement which started in São Paulo on June 06 over a 20 centavos (nine cents) increase in the city’s bus fare has inspired demonstrations against corruption nationwide, with a total of 1,405,000 Brazilians flooding the streets of several major cities such as Fortaleza, Rio de Janeiro, and Brasília.

The backdrop for the first protests was São Paulo where its high fare for public transportation is the 8th most expensive in the world. According to Globo, Brazil’s biggest newspaper, a New York citizen works 6.33 minutes to pay its fare, but a São Paulo citizen would need to work 13.89 minutes. The movement began with the student led-group, Public Fare Free fighting for fairer prices and better treatment of transit workers.

On June 13th the demonstrations became national news as dramatic scenes of policemen making a barricade in order to prevent protesters from occupying Avenida Paulista (one of the country’s major business sites) were displayed in Brazil’s most watched news programs. Perhaps the biggest outlet for the protestors was the social networks which provided a public forum for announcements and demonstrations. In the next four days, 270 thousand people went to the streets in approximately 30 cities. As a result bus fares were restored to their original price in various cities, including São Paulo but by then it was clear that the fight was about much more than the 20 cents increase. A poll conducted by IBOPE in seven different states and Brasilia stated that out of its 2002 participants, 53.7% were protesting for public transportation, 49% against corruption, 40.5% for fare reduction, 36.7% for better public health, 30.9% against cost spent for World Cup, 29.8% for a better public educational system, 11.9% against Constitutional amendment PEC37, 11.4% for a political system change, and finally 41% against police censure. By June 19th, President Dilma Rouseff, had made a national address concerning the protests and assured demonstrators that their voice would be heard.

On the day after the address, protests continued all over the Country, in major and minor cities. In response, Rouseff proposed a “National Pact” between the government and the pacifist demonstrators. The National Pact is based on five major proposals: a political reform; tougher punishments on political corruption; investments of 50 billion Reais (US$ 23 billion) in mobility transportation; more investments in health care; earmark a 100% of petroleum royalties and 50% of income source from pre-layer salt to education (depending on Congress approval). Since this pact, the House of Representatives has rejected the Constitutional amendment PEC37 (which would have curbed prosecutors´ power to investigate), more rigid laws on political corruption were created, and a proposal to earmark 100% of petroleum royalties to education and health care was approved.

Though the protests may have caused some temporary instability in the Brazilian economy in June, they are actually a good sign for the long term.  The protests were peaceful and the government was responsive—both of those facts are good indicators that Brazil’s democracy is strengthening and its population is becoming more engaged with the country’s future. Brazil’s recent slowdown is due more to global factors, as we have seen other big emerging markets including India and China also experiencing recent slowdowns. Economists from a major Brazilian bank, Banc Itau-Unibanco, see the same positive long-term signs for the Brazilian economy as our analysts at Geo Strategy Partners, forecasting in a recent report that they believe the  protest’s legacy will be a positive influence for the Brazilian economy if the government continues to work on “strengthening institutions in a sustainable manner, with macroeconomic stability and fiscal balance”.

In any scenario of economy recovery, Brazil will get increasing worldwide attention as an opportunity for global companies to increase their global market share. As the largest Latin American economy, Brazil has been and will remain a favorite of investors. Geo Strategy Partners, for instance, has recently been involved in several major market strategy projects in Brazil, with companies viewing Brazil as the primary avenue to break into Latin America.  In just the last two months, Brazil has been featured by multiple major journals not only as an example of a solid democracy, but also for hosting the Confederation Cup and for the Pope’s visit.   This attention on Brazil will only increase in the coming years as Brazil plays host to the 2014 FIFA World Cup and 2016 Olympic Games.  The economic future of Brazil is looking very bright indeed, or as they say down there in Brazil “The giant woke up”!

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